The Contradictions of Macronism

The Contradictions of Macronism

Enacting a series of market reforms in the name of “equality of opportunity,” Emmanuel Macron’s program embodies the contradictions inherent in progressive neoliberalism.

Philippe Askenazy &squarf; Winter 2018
British Prime Minister Theresa May meets with French President Emmanuel Macron in Sweden, November 17, 2017. Courtesy of Number 10.

Since French president Emmanuel Macron defeated the National Front’s Marine Le Pen in last year’s election, his style of politics has been feted by liberals as a bulwark against far-right populism. But what is Macronism? And does it really propose new ideas and solutions capable of definitively defeating populism?

For the French, Macronism is a novelty. From the beginning of the Fifth Republic in 1958 until now, two coalitions supported each of the two historically dominant parties in the French political system. In recent years, liberals and leftists have coalesced around the Socialist Party, while conservatives and neoliberals voted for the Republicans.

Macronism broke these coalitions apart to bring liberals together with neoliberals. The voters and politicians in this new formation back European integration and, more generally, an open and multicultural France. They call for modernization of the country, even though their visions of modernity may be different: for the liberals, it’s achieving equal rights; the neoliberals envision making France a “start-up nation,” driven by digital innovation.

Macron gained the support of various groups, from LGBTI organizations to tech entrepreneurs. As a former investment banker, Macron has consistently proposed a pro-business program. And during his campaign, Macron pledged to protect women’s rights as well as to fight homophobia and expand the rights of the LGBTI community in France. He was the only credible alternative to Le Pen and, crucially, the Republican François Fillon. Fillon was the champion of the conservative Catholics who rallied strongly against gay marriage. Just four months before the election, Fillon had topped the polls; despite scandals, he eventually lost the second round of the presidential election by only a small margin (he gained 20 percent of the vote, versus 21.3 percent for Le Pen and 24 percent for Macron). If the centrist François Bayrou had not withdrawn and joined Macron, the latter would likely not have won the presidency.

Macron has attracted intellectuals and technocrats from different backgrounds as well. Formerly competing think tanks such as Terra Nova—a progressive institution, previously close to the Socialist Party—and the neoliberal Institut Montaigne (mainly funded by large private firms such as IBM) joined forces. Both headed by two personal friends of Macron, they first organized seminars on presidential issues and then mobilized their networks of experts to contribute to or join Macron’s teams. For these progressives and neoliberals, the forces of capitalism, technological change, and globalization are so strong that job protection and social equality, which France has attempted to maintain with a costly welfare state, are no longer viable political objectives. For them, free entrepreneurship, equal status, and equal opportunity, which are compatible with competition, will be the new drivers of progress and social cohesion.

If novel in France, this new coalition is similar to the one behind Clintonism in the United States or Blair’s “third way” in the United Kingdom. Fifteen years ago, Tony Blair clearly stated his vision: “true equality: equal status and opportunity rather than equality of outcome.” Macronism may be viewed as a reincarnation of the kind of “progressive neoliberalism” Nancy Fraser recently declared defeated in the United States with the election of Donald Trump.

Against Le Pen, a similar coalition attracted French voters in multicultural, progressive, and wealthy areas. In Paris’s inner city, Macron scored 35 percent in first-round voting and in the second, nearly 90 percent. Macron’s party La République En Marche! (LREM) gained an overwhelming legislative majority amid record abstention by demotivated far-right and left-wing voters. In the months after the election, Macron has made some gestures to his more progressive flank, specifically on climate change. The new president of the national assembly (the lower house of parliament) is the former leader of the Green Party, Europe Écologie les Verts, who joined Macron’s party. (The Greens no longer have a single member in parliament, as compared to seventeen in the previous legislature.) Macron gave the key job of Minister of Ecology to Nicolas Hulot, a leading figure of the country’s environmental movement. And in June, just before the French legislative elections, he received global attention for tweeting “Make Our Planet Great Again,” in response to Donald Trump’s decision to pull the United States out of the Paris climate accords.

But at its core, Macronism is less about saving the planet than it is about liberalizing the economy. The ultimate objective of Macronism is to transform France through promises of equal opportunity, economic growth, and low unemployment. To reach this new golden age, Macron’s program and the preliminary decisions of the French government are consistent with a global strategy that could be described as “Make France Great Britain.” The Brexit vote might offer the opportunity for France to capture key geopolitical and economic assets that the United Kingdom owns within the European Union (EU). These include the roles of key partner of the United States and the most attractive place for financial and creative activities. Accordingly, Macron is actively cultivating his friendship with Trump. And his government is sticking to the recommendations of the IMF and the EU Commission, cutting taxes on the wealthy, reducing employment and investment in the public sector, and curtailing labor protections and benefits.

As with Clintonism and Blairism, Macronism embodies the inherent contradiction of progressive neoliberalism: social protections are not obstacles to equal opportunity, but rather, necessary conditions for attaining this objective. Labor protections benefit minorities and more generally those who face discrimination first. The income, wealth, health, and social capital of one’s parents remain crucial determinants of individual opportunity. Rising inequality and deregulation hamper the pursuit of real equal opportunity. Macron’s lip service to “equal opportunity,” like Blair’s, therefore simply severs opportunity from outcome.

France, like the United Kingdom until the Brexit vote, is in a unique position to wield power within the EU. The two countries share many common characteristics. They are the sole European countries that are permanent members of the UN Security Council. They possess nuclear weapons and spend consistently more than $50 billion each on their armed forces and in foreign military aid. The French and British GDP are roughly the same and are mainly driven by the service industries. Both countries benefit from a growing population (67 million in France, and nearly 66 million in the United Kingdom) and a fertility rate far higher than other large European countries. London and Paris are by far the two largest cities in Europe (in terms of both population and GDP), consistently ranked among the world’s top cities alongside New York or Tokyo. Also, not inconsequentially, France and the United Kingdom have internationally acclaimed and highly influential European schools of economics and business; they also export academics and experts around the world, especially to elite American and European universities and to international institutions.

A part of British prosperity has been built on its full exploitation of UK membership in the EU, while simultaneously putting its national interest first. As the United Kingdom is a member of the EU, all of its financial institutions profit from single European passport rights, which means they can operate in European member countries without requiring further authorization. For example, it is not necessary to be a member of the Eurozone to manage euro foreign exchanges. The United Kingdom never joined the euro, which allowed it to retain substantial control over its budgetary and monetary policies. But, in April 2016, the United Kingdom’s financial corporations handled nearly 40 percent of the euro foreign exchange transactions (compared to about 5 percent in France and 3.5 percent in Germany).

In 1979, Margaret Thatcher was the first to seize this opportunity. She made London the financial center of Europe. Her neoliberal policies—which included “workfare” (limiting welfare benefits to those actively searching for work or enrolled in job training); weakening trade unions; privatizing public services and utilities; lowering taxes on business, high salaries, and on the wealthiest individuals—attracted banks and insurance companies to London. Indeed, banks found a stock market enlarged by privatization. Profits were poorly taxed, and the high-wage employees in the financial sector enjoyed low taxation as well. European corporations moved investments and jobs from the continent to London.

At the same time, Thatcher obtained exemptions for the United Kingdom within the EU, including a substantial rebate on her country’s contribution to the EU’s budget. Tony Blair’s Labour Party, which was elected in a landslide victory in 1997, consolidated the United Kingdom’s dominant position within the EU, facilitating the development of a “shadow banking system” (unregulated activities by regulated institutions) and refusing to control Britain’s overseas tax havens. In 2004 he facilitated the establishment in London of the Committee of European Banking Supervisors (transformed into the European Banking Authority in 2011), which monitors regulation of the European banking sector.

The introduction of a national minimum wage in 1999 limited the number of working poor, but Blairites did nothing to stop the decline of trade unions or to ban zero-hour employment contracts. At the same time, massive investments in education were made with the promise that this would create equal opportunity for all irrespective of one’s social or cultural background. This strategy strengthened the economic appeal of the United Kingdom, fueling the immigration of both high-skilled and low-skilled Europeans. This new demographic, and a more educated and young native population provided a workforce for diversified creative industries, from advertising to biotechnology, and for personal services consumed by rentiers and high-wage earners.

One reason the United Kingdom has been able to obtain the advantages of EU membership, while limiting its constraints, is its distinctive geopolitical position. The United Kingdom has been a key partner of the United States in Europe on diplomatic, military, and economic issues. And since Thatcher, the United Kingdom has influenced the EU in the direction of free trade and deregulation of the product, service, and labor markets. It was thus a useful ally for conservative European governments as well as the European Commission, OECD, and IMF. From the standpoint of these governments and institutions, accepting the exceptional status of the United Kingdom was synonymous with supporting neoliberalism.

In just six months of Macron’s presidency, France has made great strides in appropriating positions that Brexit in effect put up for grabs: acting as a bridge between the United States and the EU, serving as a guiding light for neoliberal and globalized elites, and placing its own national interests first within the EU.

While relations between Germany and Donald Trump were deteriorating in the summer of 2017, Macron invited the American president to attend France’s Bastille Day military parade in great pomp and circumstance, cementing friendship in spite of apparent political differences. The same month, the French government nationalized the Chantiers de l’Atlantique (some of the world’s largest shipyards), provoking the fury of Italy. These French shipyards were to be sold to a state-owned Italian firm, but France had backed out in order to try to secure a better deal from Italy (which it eventually received in late September 2017). Macron’s neoliberal credentials meant France was exempt from criticism from other countries or international institutions for reneging on the deal, something that would have been unlikely before he took over.

France has since also strongly lobbied for moving the headquarters of the European Banking Authority to Paris, where the European Securities and Markets Authority is already housed. Even more than the sheer size of these agencies, their location matters for the magnetic effect they could have on workers from the financial sector who are keen to be close to the industry’s watchdogs. In November, European governments voted for Paris in a move that will further strengthen French influence.

Macron’s France has already become a new model for powerful European institutions that once supported the United Kingdom. The IMF, in an enthusiastic July statement to its staff, proclaimed: “The government’s ambitious reform program could go a long way in addressing France’s longstanding economic challenges.” In September Angel Gurría, the Secretary-General of the OECD, declared to Bloomberg that he had “enormous hope” in Macron’s reforms, which closely mirror OECD recommendations.

To showcase his progressivism, Macron ostensibly acted against “social dumping” in Europe by supporting tighter regulation of the employment of “posted workers” (workers employed and protected by a firm based in one EU state but working in another). Though an agreement was eventually reached in October 2017, Macron didn’t challenge the fact that the new rules would come into force only four years after their formal adoption. And despite his sassy tweet about climate change and a campaign promise to evaluate the Comprehensive Economic and Trade Agreement (CETA) with Canada, he didn’t block the deal, which went into effect in September. A report by eight independent experts concluding that CETA was most likely incompatible with combating climate change was simply tossed into a drawer. Then, in November, the government announced a delay in closing down France’s nuclear plants, slowing down the transition to renewable energy.

The most disruptive changes in Macron’s domestic economic policy, though, relate to the labor market, which is the main concern of the EU Commission, the IMF, and the OECD. Macronism is based on two strategies: first, promoting entrepreneurship in order to seize the opportunities of the digital economy, and second, “equalizing” job status between salaried workers and independent contractors under the pretext of providing “equal opportunity” à la Tony Blair.

Independent contractors—entrepreneurs or gig-economy workers (like drivers working for ridesharing platforms)—will now enjoy the same welfare benefits as salaried employees. They will have access to the same public social security protection as salaried workers in private firms. The pension schemes of the self-employed, regular employees, and civil servants will be unified. Self-employed workers will even be eligible for unemployment benefits (details of how exactly this will operate are as yet unknown).

This convergence toward similar benefits whatever one’s job status will be implemented without a corresponding increase in budget. This means a reduction in some benefits—for example, lower pensions for civil servants—and stricter criteria for eligibility—for instance, a jobseeker’s allowance can be suspended after two refusals of a “decent” proposition by the job center.

This iteration of “equal opportunity” has weakened rights for employees in France. The fast-track labor ordinances implemented in September introduced quasi “at-will employment” status, in which an employer may dismiss an employee for any reason without warning. Previously, in most cases of wrongful termination, French labor courts could not impose workplace reinstatement, though they had freedom to determine the amount of compensation for unfairly dismissed employees. Now, they no longer have this freedom and are legally bound to conform to certain limits. For example, a dismissed employee who has worked for less than a year in a firm with eleven or more employees may be awarded a maximum of one month’s gross wage or just half a month’s wage in a smaller firm, the minimum compensation being—nothing. For such paltry potential gains, dismissed workers will be unlikely to ever take their claims to court.

Until now more than 90 percent of French workers were covered by collective bargaining agreements at the level of the “branch” or industry. The historical reasoning for this high coverage rate was to moderate competitive pressures across France. These branch agreements guaranteed a wide palette of supplementary benefits: seniority bonuses, paid family leave, and full compensation during maternity leave, among others. Macron’s labor reforms dramatically expand the possibility for firms to opt out of these branch agreements. In addition, if new firm-level arrangements violate previously agreed labor contracts, employees can refuse the changes—but the reforms make such refusal a legal cause for dismissal. Smaller firms are exempted from having to negotiate an opt-out agreement with a union. The employer has only to obtain the support of two-thirds of workers by referendum. So, for example, in a workplace with eight men and two women, such a majority might easily reach an “agreement” to cancel extended maternity leave granted in the branch-level convention. Or, in a subcontracting firm, an employer may attempt to convince workers that a permanent slash in bonuses is a crucial condition for remaining competitive.

The direct consequence of the labor law reforms for workers will be downward pressure on their bonuses and benefits, and increased inequality within and between workplaces. Ironically, considering Macron’s campaign promises of equality, workers vulnerable to discrimination, especially women, are likely to be the first affected, illustrating one of the central contradictions of his brand of progressive neoliberalism. To mitigate the potential shocks to wages from these labor reforms, the government plans to reduce social contributions paid by private employees in January and then October 2018; net wages of private workers will increase mechanically by nearly 1.9 percent.

However, the main winners of the socio-fiscal reforms will be the wealthiest. To improve the attractiveness of the “place de Paris” and to attract globalized elites, Macron has simply cancelled the wealth tax or the “impôt sur la fortune,” a tax on non-professional net wealth above 1.3 million euros (about $1.5 million) and on financial assets (as well as yachts or private jets). This is a gift of nearly 1.5 million euros per year for households owning 100 million euros in assets. The progressive taxation on financial income has been replaced by a flat tax. Taxes on corporate profits and various specific taxes on financial institutions will be reduced or removed. The number of publicly funded international secondary schools in Paris will be doubled by 2022. This strategy has already begun to bear fruit. The same day that the French capital won the bid to host the European Banking Authority, Goldman Sachs chose Frankfurt and Paris as its post-Brexit EU hubs; its chief executive has admitted that most staff might prefer France.

The next stages of deregulation are already underway. Can this stripe of vigorous Macronism succeed? In the short run, it is likely to face strong headwinds.

Frankfurt, the seat of the European Central Bank, is still a serious competitor in the battle to attract financial activities leaving London. The credibility of Macronism relies on its potential ability to reduce the budget deficit. So, the French government has started to cut public spending and transfers dramatically. Housing subsidies were first reduced in October 2017 and will again plummet. Increased social taxes will lower net pensions by nearly 2 percent in January 2018 for 60 percent of retirees. Central government contributions to the budget of local communities will be slashed. Partially state-financed jobs for unskilled youth or the long-term unemployed in these communities and in non-profit associations are already drastically reduced. The scheduled increase of nominal wages of civil servants to partially compensate inflation has been withdrawn, and so on.

The inconsistency of the Macron administration’s policy is particularly apparent in education. Macron’s promise to cut in half the first-year class size of primary schools in the most deprived areas of the country has been implemented immediately; this measure will be extended to include second-year classes in 2018. At the same time, the government has announced that recruitment of teachers in public secondary schools will drop by 20 percent in 2018 compared to 2017. And how can public-sector teachers be motivated if their real wages decline? How is it possible to claim that education is a priority when towns must curtail investment in their primary schools and reduce non-teaching staff? Although Macron’s emphasis on education has mirrored Tony Blair’s when he was prime minister, there is a huge gap in their actual policies, since public employment and investment in education jumped during the Blair years.

Macron’s popularity has waned quickly. By September 2017, after just five months in office, various opinion polls indicated that roughly 55 percent of the population did not consider Macron a “good president,” an approval rating similar to Donald Trump’s in the United States (polls in October and November suggested this negative tide had ebbed). Macronists (including prominent French economists) believe his lack of popularity will pass. They envision a rosy scenario: improvement in economic growth in the rest of the Eurozone will offset the effect of French austerity measures in 2018–19; then, the pro-business reforms should deliver sustainable growth for the second part of the presidential term in office; and as a result of this newfound prosperity, the budgetary constraint will eventually ease. The government also hopes that ongoing disputes on social issues will turn progressive forces back in its favor. In fall 2018, the bioethics laws will be updated, following a large public debate. Macron has already announced his support for extending assisted reproduction to all women without regard to their sexual orientation. The debate will also cover related topics such as the right to die with dignity.

In any case, Macronists know they will not face credible opposition, at least for now. Conservatives can hardly criticize their pro-business policy. Le Pen is primarily concentrating on rebuilding her own authority. Unions are deeply divided, resulting in poor turnout in rallies and strikes against Macron’s labor reforms. The Socialist Party lacks leadership and ideas. The radical left has a leader; but Jean-Luc Mélenchon, who is of the same generation as Jeremy Corbyn and Bernie Sanders, still fails to mobilize French youth in sufficient numbers despite his promising performance with young voters last April.

Bill Clinton and Tony Blair inaugurated years of strong economic growth and job creation. However, they were not able to deliver on the promise of truly equal opportunity for the many. Despite a massive investment in education, social mobility did not improve in the United Kingdom; on the contrary, income and wealth inequalities deepened. Facing harder budgetary constraints than the U.S. or UK contexts, Macronism proposes even fewer remedies to address the fundamental contradiction of progressive neoliberalism.

In a mirror image of Tony Blair’s campaign to bring the Olympic Games to London in 2012, Macron has enthusiastically campaigned to attract the 2024 games to Paris. If he is reelected in 2022 for a five-year term, he may be able to do even better than Blair—by himself opening the games, representing the symbol of attractive and “modern” Macronite France. However, it is also possible that his policies will fail and he will be out of office, leaving the ceremony to be opened by another president. Even in the event of France’s economic recovery, Macronism may generate too many losers and too many visibly wealthy winners for it to succeed. Macron’s successor is unlikely to belong to the weak and divided left. But if such a candidate can unite neoconservatives and the far right, that will be the last nail in the coffin of progressive neoliberalism.

Philippe Askenazy is a senior researcher at the CNRS (French National Center for Scientific Research) and professor of economics at the École Normale Supérieure.

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The Kurds

[W]hen we refer to all Kurdish fighters synonymously, we simply blur the fact that they have very different politics. . . right now, yes, the people are facing the Islamic State threat, so it’s very important to have a unified focus. But the truth is, ideologically and politically these are very, very different systems. Actually almost opposite to each other. —Dilar Dirik, “Rojava vs. the World,” February 2015

The Kurds, who share ethnic and cultural similarities with Iranians and are mostly Muslim by religion (largely Sunni but with many minorities), have long struggled for self-determination. After World War I, their lands were divided up between Iraq, Iran, Syria, and Turkey. In Iran, though there have been small separatist movements, Kurds are mostly subjected to the same repressive treatment as everyone else (though they also face Persian and Shi’ite chauvinism, and a number of Kurdish political prisoners were recently executed). The situation is worse in Iraq, Syria, and Turkey, where the Kurds are a minority people subjected to ethnically targeted violations of human rights.

Iraq: In 1986–89, Saddam Hussein conducted a genocidal campaign in which tens of thousands were murdered and thousands of Kurdish villages destroyed, including by bombing and chemical warfare. After the first Gulf War, the UN sought to establish a safe haven in parts of Kurdistan, and the United States and UK set up a no-fly zone. In 2003, the Kurdish peshmerga sided with the U.S.-led coalition against Saddam Hussein. In 2005, after a long struggle with Baghdad, the Iraqi Kurds won constitutional recognition of their autonomous region, and the Kurdistan Regional Government has since signed oil contracts with a number of Western oil companies as well as with Turkey. Iraqi Kurdistan has two main political parties, the Kurdistan Democratic Party (KDP) and the Patriotic Union of Kurdistan (PUK), both clan-based and patriarchal.

Turkey: For much of its modern history, Turkey has pursued a policy of forced assimilation towards its minority peoples; this policy is particularly stringent in the case of the Kurds—until recently referred to as the “mountain Turks”—who make up 20 percent of the total population. The policy has included forced population transfers; a ban on use of the Kurdish language, costume, music, festivals, and names; and extreme repression of any attempt at resistance. Large revolts were suppressed in 1925, 1930, and 1938, and the repression escalated with the formation of the PKK as a national liberation party, resulting in civil war in the Kurdish region from 1984 to 1999.

Syria: Kurds make up perhaps 15 percent of the population and live mostly in the northeastern part of Syria. In 1962, after Syria was declared an Arab republic, a large number of Kurds were stripped of their citizenship and declared aliens, which made it impossible for them to get an education, jobs, or any public benefits. Their land was given to Arabs. The PYD was founded in 2003 and immediately banned; its members were jailed and murdered, and a Kurdish uprising in Qamishli was met with severe military violence by the regime. When the uprising against Bashar al Assad began as part of the Arab Spring, Kurds participated, but after 2012, when they captured Kobani from the Syrian army, they withdrew most of their energy from the war against Assad in order to set up a liberated area. For this reason, some other parts of the Syrian resistance consider them Assad’s allies. The Kurds in turn cite examples of discrimination against them within the opposition.